A blog about Cyber Security & Compliance

ESET and the Ponemon Institute have announced results of The State of Cybersecurity in Healthcare Organizations in 2016.

According to the study, healthcare organizations average about one cyber attack per month with 48% of respondents said their organizations have experienced an incident involving the loss or exposure of patient information during the last 12 months. Yet despite these incidents, only half indicated their organization has an incident response plan in place.

The concurrence of technology advances and delays in technology updates creates a perfect storm for healthcare IT security,” said Stephen Cobb, senior security researcher at ESET. “The healthcare sector needs to organize incident response processes at the same level as cyber criminals to properly protect health data relative to current and future threat levels. A good start would be for all organizations to put incident response processes in place, including comprehensive backup and disaster recovery mechanisms. Beyond that, there is clearly a need for effective DDoS and malware protection, strong authentication, encryption and patch management

Key findings of the survey:

78% of respondents, the most common security incident is the exploitation of existing software vulnerabilities greater than three months old.

63% said the primary consequences of APTs and zero-day attacks were IT downtime

46% of respondents experienced an inability to provide services which create serious risks for patient treatment.

Hackers are most interested in stealing patient information

The most attractive and lucrative target for unauthorized access and abuse can be found in patients’ medical records, according to 81% of respondents.

Healthcare organizations worry most about system failures

79% of respondents said that system failures are one of the top three threats facing their organizations

52% of respondents said legacy systems and new technologies to support cloud and mobile implementations, big data and the Internet of Things increase security vulnerabilities for patient information

46% of respondents also expressed concern about the impact of employee negligence

45% cited the ineffectiveness of HIPAA mandated business associate agreements designed to ensure patient information security

DDoS attacks have cost organizations on average $1.32 million in the past 12 months

37% of respondents say their organization experienced a DDoS attack that caused a disruption to operations and/or system downtime about every four months. These attacks cost an average of $1.32 million each, including lost productivity, reputation loss and brand damage.

Healthcare organizations need a healthy dose of investment in technologies

On average, healthcare organizations represented in this research spend $23 million annually on IT

12% on average is allocated to information security

Since an average of $1.3 million is spent annually for DDoS attacks alone, a business case can be made to increase technology investments to reduce the frequency of successful attacks

Based on our field research, healthcare organizations are struggling to deal with a variety of threats, but they are pessimistic about their ability to mitigate risks, vulnerabilities and attacks,” said Larry Ponemon, chairman and founder of The Ponemon Institute. “As evidenced by the headline-grabbing data breaches over the past few years at large insurers and healthcare systems, hackers are finding the most lucrative information in patient medical records. As a result, there is more pressure than ever for healthcare organizations to refine their cybersecurity strategies

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Tripwire 2016 Energy Survey: Physical Damage

Tripwire’s 2016 energy study was conducted by Dimensional Research on the cyber security challenges faced by organizations in the energy sector. The study was carried out in November 2015, and respondents included over 150 IT professionals in the energy, utilities, and oil and gas industries.

“After hundreds of years protecting our nation’s geographic borders, it is sobering to note that possibly the most vulnerable frontier happens to be the infrastructure that runs the largest companies in the country.”

Rheka Shenoy, VP and general manager of industrial IT cyber security for Belden

Does your organization have the ability to accurately track all the threats targeting your OT networks?

Does your organization have the ability to accurately track all the threats targeting your OT networks?

In your opinion, is your organization a target for a cyberattack that will cause physical damage?

Is your organization a potential target for a nation-state cyberattack?

The incredibly high percentages of these responses underscores the need for these industries to take material steps to improve cyber security. These threats are not going away. They are getting worse. We’ve already seen the reality of these responses in the Ukraine mere months after this survey was completed. There can be no doubt that there is a physical safety risk from cyber attacks targeting the energy industry today. While the situation may seem dire, in many cases there are well understood best practices that can be deployed to materially reduce the risk of successful cyber attacks.

Nuisance marketing calls frustrate people. The law is clear around what is allowed, and we’ve been clear that we will fine companies who don’t follow the law. That will continue in 2016. We’ve got 90 ongoing investigations, and a million pounds worth of fines in the pipeline

The ICO received around 170,000 concerns in 2015 from people who’ve received nuisance calls and texts, a similar number to the previous year (2014: 175,330). PPI claims prompted the most complaints, followed by accident claims. Areas identified as emerging sectors for nuisance calls and texts included call blocking services, oven cleaning services and industrial hearing injury claims.

The following are examples of complaints showed the level of distress that calls can cause:

Telecom Protection Service:

“I was recovering from major surgery at the time and the call caused me distress. The caller was very smooth talking and did not make it clear that he was selling a commercial service that was nothing to do with the TPS. The call was frankly misleading.”

HELM:

“I am receiving daily updates regarding a friend in hospital, and am expecting the worst. When these calls come in I expect it to be from the hospital.”

Cold Call Elimination:

“This company has ‘conned’ my mother out of £84.99 for anunnecessary service … my parents are 87 and 86 respectively; my father is suffering from dementia.”

“I am looking after my elderly mother who has terminal cancer. She initially answered and I could see I needed to intervene as I could hear the sales guy not giving up. I took the phone and asked him who he was and what he wanted. He got quite annoyed that I had intervened and I told him we were not interested.”

Point One Marketing:

“Very upset and angry that my mum, who has dementia, was talked into giving credit card details when it would have been obvious to the caller that she had dementia. This caused my mum distress because I had to explain why her debit card had to be cancelled and what she had done. This has caused both of us great distress. Had I not checked her call log and … the number that had called her I would not have known it had happened at all.”

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Following significant feedback from the global PCI community and security experts, the Payment Card Industry Security Standards Council (PCI SSC) has announced a change to the date that organizations who process payments must migrate to TLS 1.1 encryption or higher.

The original deadline date for migration, June 2016, was included in the most recent version of the PCI Data Security Standard, version 3.1 (PCI DSS 3.1), which was published in April of 2015. The new deadline date, June 2018, will be included in the next version of the PCI Data Security Standard, which is expected in 2016.

Early market feedback told us migration to more secure encryption would be technically simple, and it was, but in the field a lot of business issues surfaced as we continued dialog with merchants, payment processors and banks,” said Stephen Orfei, General Manager, PCI SSC. “We want merchants protected against data theft but not at the expense of turning away business, so we changed the date. The global payments ecosystem is complex, especially when you think about how much more business is done today on mobile devices around the world. If you put mobile requirements together with encryption, the SHA-1 browser upgrade and EMV in the US, that’s a lot to handle. And it means it will take some time to get everyone up to speed. We’re working very hard with representatives from every part of the ecosystem to make sure it happens as before the bad guys break in.

Some payment security organizations service thousands of international customers all of whom use different SSL and TLS configurations,” said Troy Leach, Chief Technology Officer, PCI SSC. “The migration date will be changed in the updated Standard next year to accommodate those companies and their clients. Other related provisions will also change to ensure all new customers are outfitted with the most secure encryption into the future. Still, we encourage all organizations to migrate as soon as possible and remain vigilant. Staying current with software patches remains an important piece of the security puzzle

In addition to the migration deadline date-change, the PCI Security Standards Council has updated:

A new requirement date for payment service providers to begin offering more secure TLS 1.1 or higher encryption

A requirement for new implementations to be based on TLS 1.1 or higher

An exception to the deadline date for Payment Terminals, known as “POI” or Points of Interaction.

Merchants are encouraged to contact their payment processors and / or acquiring banks for detailed guidance on upgrading their ecommerce sites to the more secure encryption offered by TLS 1.1 or higher.

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The Payment Card Industry Security Standards Council (PCI SSC), has announced the election results for its 2016 Special Interest Group (SIG) project.

Special Interest Groups are community-led initiatives that address important security challenges related to PCI Security Standards. One new Special Interest Group is selected every year, but groups may run for more than 12 months in order to complete the agreed-upon goals.

PCI member organizations, including merchants, financial institutions, service providers and associations, voted on five proposed Special Interest Group topics submitted by their peers. The winning topic selected for 2016 was, “Best Practices for Safe E-Commerce”

The new Special Interest Group is slated to kick off in January 2016

The Council invites PCI member organizations and assessors interested in getting involved in this SIG project to register on the PCI SSC website by 4 January 2016.

The community choose from among five strong proposals, so it was certainly not an easy decision,” said Jeremy King, International Director, PCI SSC. “We are encouraged by how many Participating Organizations were involved in the submission and election process this year. SIGs continue to be an excellent vehicle for putting their expertise to work to improve payment card security globally

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Ilex International have launched their Breach Confidence Index. The Index is a benchmark survey created to monitor the level of confidence that British businesses have when it comes to security breaches. The Index shows high confidence levels

24% of IT decision makers surveyed very confident

59% fairly confident that their business is protected against a data security breach

The Breach Confidence Index raises major concerns for British businesses. Businesses are not currently required to report security breaches and in many cases, may not even know that they have experienced one. The survey found that 49% said their business has not experienced a security breach. In comparison to actual statistics shared at the 2015 Cyber Symposium, there is a major gap between the perception and reality of security breaches among businesses.

According to the survey the most common weaknesses resulting in a Data Breach were

22%

MALWARE VULNERABILITIES

21%

EMAIL SECURITY

15%

EMPLOYEE EDUCATION

12%

CLOUD APPLICATIONS

12%

INSIDER THREATS

8%

ACCESS CONTROL

8%

BYOD OR MOBILE ACCESS

6%

NON-COMPLIANCE TO CURRENT REGULATIONS

Weaknesses relating to identity and access management considerably increase as organisations expand their workforce. Some of the most common issues highlighted by large businesses include:

44% insider threats

42% employee education

26% access control

24% BYOD or mobile access

All figures in the Ilex International Breach Confidence Index, unless otherwise stated, are from YouGov Plc. Total sample size was 530 IT Decision Makers. Fieldwork was undertaken between 6th – 12th August 2015. The survey was carried out online.

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This week business leaders and security professionals gathered in Nice, France to discuss payment based security and especially PCI DSS and P2Pe.

Jeremy King PCI Security Standards Council International Director said, The new European Commission Payment Services Directive 2 along with the European Banking Authority Guidelines for Securing Internet Payments have clear and detailed requirements for organisations in protecting cardholder data. Add to that the soon to be released General Data Protection Regulation which covers all data security, and you have a massive increase in data security, which when implemented will impact all organisations in Europe and beyond,

These regulations will force organisations to take security seriously, and PCI provides the most complete set of data security standards available globally. Establishing good data security takes time and effort. Organisations need to know these regulations are coming and put a plan in place now for ongoing security

With 70% of all card fraud coming from Card-Not-Present (CNP), a figure that surpasses the previous 2008 record which was set during the EMV chip migration, it is a critical time for the industry.

A significant amount of the conference was spent on new and developing technologies including::

Cloud – Daniel Fritsche of Coalfire presented on Virtualisation and the Cloud

Mobile – several presentations including the Smart Payments Association

Point to Point Encryption (P2PE) – Andrew Barratt of Coalfire delivered a panel discussion

Tokenisation – A presentation by Lufthansa Systems

Jeremy King added. PCI is committed to helping organisations globally improve their data security. Our range of standards, and especially our supporting documents, are designed to help all companies improve and protect their data security. The annual Community Meeting is a big part of our efforts to engage with companies from all sectors, sharing and exchanging information to ensure they have the very best level of security

We must work together to tackle card-not-present fraud with technologies such as point-to-point encryption and tokenisation that devalue data and make it useless if stolen by criminals.

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The ICO has issued a statement in response to the European Court of Justice ruling about the legal basis for the transfer of personal data to businesses that are members of the US Safe Harbor

Deputy Commissioner David Smith said:

“Today’s ruling is clearly significant and it is important that regulators and legislators provide a considered and clear response. This ruling is about the legal basis for the transfer of personal data to businesses that are members of the US Safe Harbor. It does not mean that there is an increase in the threat to people’s personal data, but it does make clear the important obligation on organisations to protect people’s data when it leaves the UK.

“The judgment means that businesses that use Safe Harbor will need to review how they ensure that data transferred to the US is transferred in line with the law. We recognise that it will take them some time for them to do this.

“It is important to bear in mind that the Safe Harbor is not the only basis on which transfers of personal data to the US can be made. Many transfers already take place based on different provisions. The ICO has previously published guidance on the full range of options available to businesses to ensure that they are complying with the law related to international transfers. We will now be considering the judgment in detail, working with our counterpart data protection authorities in the other EU member states and issuing further guidance for businesses on the options open to them. Businesses should check the ICO website for details over the coming weeks.

“Concerns about the Safe Harbor are not new. That is why negotiations have been taking place for some time between the European Commission and US authorities with a view to introducing a new, more privacy protective arrangement to replace the existing Safe Harbor agreement. We understand that these negotiations are well advanced.”

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UK companies are placing themselves at risk of cyberattacks and data breaches as a result of rampant use of cloud storage services and unclear or non-existent corporate policies according to research released today by WinMagic Inc. The survey, conducted by CensusWide, of 1,000 office workers in organisations of 50 or more employees revealed widespread, and often unilateral employee use of cloud storage services could be leaving businesses with poor visibility of where their data is stored, placing potentially confidential data at risk.

Key Findings

65% of employees don’t have or don’t know the company policy on cloud storage

1 in 10 employees who use cloud storage services at least once a week have no confidence in the security of their data saved and accessed from the cloud

Cloud storage use varies widely – 41% use cloud services at least once a week, whilst 42% never use these services at all

1 in 20 employees who use cloud services at least once a week, do so despite these services being restricted by their company

35% of employees used a company sanctioned service

43% were unaware of their employer’s policy on the use of these services. In addition, of those that use cloud storage at least once a week

50% of respondents use personal equipment to access work information and services at least one a week

47% of employees use company-issued equipment at home at least once a week

Darin Welfare, EMEA VP at WinMagic, said: “This survey highlights the challenge businesses face when managing data security in the cloud. IT teams have had to cede a level of control as employees have greater access to services outside corporate control and this research indicates that IT must take additional steps to protect and control company data in this new technology landscape. The wide range of employee adoption of these services also means an additional layer of complexity when devising corporate policies and education programmes for the use of cloud storage services.”

Employees are increasingly accessing work documents and services outside the office, particularly among regular users of cloud storage. The survey revealed 70% of employees who use cloud storage at least once a week will also use work equipment at home at least once a week, significantly higher than the UK average of 47%.

The WinMagic survey highlights a clear disparity between employee use of cloud services and company IT policy, which suggests that businesses must increase focus on devising clearer security policies and better staff training programmes in order to minimise the risk for the business.

Darin Welfare added: “One of the key steps that any organisation can take to mitigate the risk from the widespread use of unsanctioned cloud services is to ensure that all company data is encrypted before employees have the opportunity to upload to the cloud. In the eventuality that the cloud vendor does not adequately put in place control mechanisms and procedures to ensure security across their infrastructure, sensitive and valuable corporate data is still encrypted and cannot be accessed and understood beyond those who have the right to. This approach provides the company with the assurance that the IT team is in control of the key and management of all company data before any employees turn to cloud storage services.”

“This survey should serve as a wake-up call for IT teams to focus resources on crafting the stringent security policies, and employee education programmes that will help the business stay secure. It also indicates that this is not something that is only down to employee behaviour. Businesses need better training for all staff on the potential dangers of cloud services. Businesses must catch up with the employee cloud revolution or risk potentially catastrophic data loss.”

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For any organization connected to the internet, it is not a question of if but when their business will be under attack, according to a recent cybersecurity report from Symantec, which found Canada ranked No. 4 worldwide in terms of ransomware and social media attacks last year. These increasing attacks put customer information, and especially payment data at risk for compromise.

When breaches do occur, response time continues to be a challenge. In more than one quarter of all breaches investigated worldwide in 2014 by Verizon, it took victim organization weeks, or even months, to contain the breaches. It is against this backdrop that global cybersecurity, payment technology and data forensics experts are gathering in Vancouver for the annual PCI North America Community Meeting to address the ongoing challenge of protecting consumer payment information from criminals, and new best practices on how organizations can best prepare for responding to a data breach.

A data breach now costs organizations an average total of $3.8 million. However, research shows that having an incident response team in place can create significant savings. Developed in collaboration with the Payment Card Industry (PCI) Forensic Investigators (PFI) community, Responding to a Data Breach: A How-to Guide for Incident Management provides merchants and service providers with key recommendations for being prepared to react quickly if a breach is suspected, and specifically what to do contain damage, and facilitate an effective investigation.

The silver lining to high profile breaches that have occurred is that there is a new sense of urgency that is translating into security vigilance from the top down, forcing businesses to prioritize and make data security business-as-usual,” said PCI SSC General Manager Stephen W. Orfei. “Prevention, detection and response are always going to be the three legs of data protection. Better detection will certainly improve response time and the ability to mitigate attacks, but managing the impact and damage of compromise comes down to preparation, having a plan in place and the right investments in technology, training and partnerships to support it

This guidance is especially important given that in over 95% of breaches it is an external party that informs the compromised organization of the breach,” added PCI SSC International Director Jeremy King. “Knowing what to do, who to contact and how to manage the early stages of the breach is critical

At its annual North America Community Meeting in Vancouver this week, the PCI Security Standards Council will discuss these best practices in the context of today’s threat and breach landscape, along with other standards and resources the industry is developing to help businesses protect their customer payment data. Keynote speaker cybersecurity blogger Brian Krebs will provide insights into the latest attacks and breaches, while PCI Forensic Investigators and authors of the Verizon Data Breach Investigation Report and PCI Compliance Report, will present key findings from their work with breached entities globally. Canadian organizations including City of Calgary, Interac and Rogers will share regional perspectives on implementing payment security technologies and best practices.

Download a copy of Responding to a Data Breach: A How-to Guide for Incident Management here.

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Banks with weak cybersecurity controls could be downgraded even if they haven’t been attacked, Standard & Poor’s said Monday in a report.

While it hasn’t yet downgraded a bank based on its computer security, the ratings company said it would consider doing so if it determined the lender was ill-prepared to withstand a data breach. It would also drop a bank’s rating if an attack caused reputational harm or resulted in losses that hurt profit, S&P said.

We view weak cybersecurity as an emerging threat that has the potential to pose a higher risk to financial firms in the future, and possibly result in downgrades

S&P analysts led by Stuart Plesser wrote in the report.

Cyberattacks have become a growing threat for banks, with more than a dozen U.S. depository institutions reporting hacks in 2012 and 2013 that prevented consumers from accessing their websites, according to the report. Last year, the personal data of tens of millions of JPMorgan Chase & Co. customers were compromised in a breach. The bank spent $250 million on cybersecurity in 2014 and will increase that to $450 million by next year, S&P said.

Hostile nation-states, terrorist organizations, criminal groups, activists and, in some cases, company insiders are behind most of the global cyberattacks on banks, S&P said. South Korea financial institutions have experienced security breaches in recent years, while a Russian security company working with law enforcement said it uncovered a two-year, billion-dollar theft from banks around the world by a gang of cybercriminals, according to the report, which didn’t identify the lenders.

‘Continual Battle’

S&P classified the global risk of cyberattacks as “medium,” saying large banks have taken steps to mitigate the danger. Bigger institutions have an advantage over smaller ones because their revenue base can defray some expenses, according to the report.

Few banks have disclosed the amount they’re spending to guard against attacks, S&P said. Still, any cuts to technology units as part of larger cost-savings efforts would be “disconcerting.”

Cyberdefense is a continual battle, particularly as technology evolves,” according to the report. “Many tech experts believe that if a hostile nation-state put all its resources into infiltrating a particular bank’s tech system, it would probably prove successful

At 89%, cash was deemed the most secure payment method, but only 9% prefer to use it.

Mobile payments represent the latest frontier for the ongoing choice we all make to balance security and privacy risk and convenience,” said John Pironti, CISA, CISM, CGEIT, CRISC, risk advisor with ISACA and president of IP Architects. “ISACA members, who are some of the most cyber-aware professionals in the world, are using mobile payments while simultaneously identifying and contemplating their potential security risks. This shows that fear of identity theft or a data breach is not slowing down adoption and it shouldn’t as long as risk is properly managed and effective and appropriate security features are in place

Reports say that contactless in-store payment will continue to grow. Overall, the global mobile payment transaction market, including solutions offered by Apple Pay, Google Wallet, PayPal and Venmo, will be worth an estimated US $2.8 trillion by 2020, according to Future Market Insights.

According to those surveyed, currently the most effective way to make mobile payments more secure is using two ways to authenticate their identity (66%), followed by requiring a short-term authentication code (18%). Far less popular was an option that puts the onus on the consumer installing phone-based security apps (9%).

People using mobile payments need to educate themselves so they are making informed choices. You need to know your options, choose an acceptable level of risk, and put a value on your personal information,” said Christos Dimitriadis, Ph.D., CISA, CISM, CRISC, international president of ISACA and group director of information security for INTRALOT. “The best tactic is awareness. Embrace and educate about new services and technologies

Understand your level of risk: Ask yourself what level of personal information and financial loss is acceptable to balance the convenience of mobile payments.

Know your options: Understand the security options available to manage your risk to an acceptable level. Using a unique passcode should be mandatory, but also look into encryption, temporary codes that expire and using multiple ways to authenticate your identity.

Value your personal information: Be aware of what information you are sharing e.g., name, birthday, national identification number, pet name, email, phone number. These pieces of information can be used by hackers to gain access to accounts. Only provide the least amount of information necessary for each transaction.

Security Governance for Retailers and Payment Providers

In the emerging mobile payment landscape, ISACA notes that there is no generally accepted understanding of which entity is responsible for keeping mobile payments secure—the consumer, the payment provider or the retailer. One approach is for businesses to use the COBIT governance framework to involve all key stakeholders in deciding on an acceptable balance of fraud rate vs. revenue. Based on that outcome, organizations should set policies and make sure that mobile payment systems adhere to them.

Members of the IT or information security group taking part in the discussion should also ensure they are keeping up to date with the latest cybersecurity developments and credentials. A joint 2015 ISACA/RSA study shows that nearly 70% of information security/information technology professionals require certification when looking for candidates to fill open security positions.

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Cybercriminals continue to focus their efforts on what is widely considered to be the weakest link in the security chain: the user. Consequently, developing a comprehensive understanding of user behavior and the implications thereof becomes paramount to corporate security strategy.

In this report, Cloudlock examine cloud cybersecurity trends across three primary dimensions: users, collaboration, and applications. The Pareto Principle, the “80/20” rule, holds true across all three dimensions, revealing a truth with surprising implications for security professionals.

Collaboration: While organizations on average collaborate with 865 external parties, just 25 of these account for 75% of cloud-based sharing per organization. Unexpectedly, 70% of sharing occurs with non-corporate email addresses security teams have little control over.

Apps: 1% of users represent 62% of all app installs in the cloud – a high concentration. Without security awareness, this small user base introduces a high volume of risk. Additionally, 52,000 installs of applications are conducted by highly privileged users – a number that should be zero given privileged accounts are highly coveted by malicious cybercriminals.

4 Actionable Takeaways for a more secure cloud environment

The findings of this report show disproportionate cloud cybersecurity risk across users, collaboration, and applications. Consider the four following risk remediation strategies.

1. Focus on the User Behavior

Focusing on the riskiest subset of users, security professionals can efficiently and dramatically reduce risk. Any abnormal behavior by data-dense and risky users should be prioritized providing the security team with valuable direction on what truly requires attention and resolution immediately.

2. Focus Security on Organizations You Collaborate With Most

Given that, on average, 75% of inter-organizational sharing is with 25 external organizations, focus on the frequent collaborative organizations to eliminate the bulk of risk, then address the long tail of remaining organizations.

3. Take Application Security beyond Discovery

Discovering third-party applications that reside on the network is only the tip of the iceberg. Elevate your security game beyond app discovery through enforcement capabilities, policy-driven app control, and end-user education. If users are blocked, they will find a way around.

4. Correlate Insights Across Cloud Environments

With multi-cloud intelligence, security teams can correlate security events across platforms, preventing cybercriminal exploits from slipping through the cracks. Consider an individual logging into Salesforce in San Francisco and ServiceNow in Kuala Lumpur using the same credentials simultaneously, indicating account compromise. Avoid point security solutions in favor of platforms offering multi-cloud insights across not only SaaS applications, but also laaS, PaaS, and IDaaS environments.

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According to a report by the Institute of Internal Auditors Research Foundation, cyber preparation at most organizations follows a classic bell curve.

Asked, for instance, how prepared their organizations would be to respond to a cyber-attack;

29% of respondents said “extremely” or “very”

44 % said “moderately”

23% said “slightly” or an ominous “not at all”

As organizations increase spending on tech tools to address cyber risks, internal auditors are advocating a holistic approach that includes policies, response planning and board involvement to develop a broader view of an organization’s cyber risks and defences.

Helped by their understanding of organization controls and risk management, internal audit can bring various functions together and help them address cyber threats more effectively, the study says.

“Boards and audit committees also must … be kept up-to-date on technologies that not only can help meet business objectives, but also may make an organization more vulnerable to attack. When properly resourced and supported, internal audit will develop the skills and perspective to provide review and assurance services in this area,” the study says.

Key Components

The report identifies five key components to cyber risk management and says internal audit can play a key role in supporting each element:

Detection: IIA’s 2015 Global Internal Audit Common Body of Knowledge (CBOK) study found that five in 10 respondents use data mining and data analytics for risk and control monitoring, as well as fraud identification. The cyber preparedness study says audit executives should partner with IT and information security pros to develop and monitor key risk indicators and validate security-related controls.

Business Continuity: Just as they plan for natural disasters or other corporate crises, organizations have to develop plans to serve customers and other stakeholders during cyber-attacks. Internal audit can help provide enterprise-wide perspective and provide assurance about the expected effectiveness of response plans.

Crisis Communications: Similar to response plans, it’s important to keep customers, shareholders, regulators and other interested parties informed during (and immediately after) a cyber breach.

Continuous Improvement: If an organization experiences a cyber-attack, internal audit can play a valuable role in helping the organization assess the effects and outline strategies and protocols to defend against the next attack.

The study also suggests corporate boards increase their ability to assess and defend against cyber risks. This may involve recruiting board and committee members with cyber-related experience or expertise, or bringing in third-party security experts to educate board members about evolving cyber threats and governance practices.

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Data privacy and security continues to be a growing concern for many organizations. With cyber attacks increasing each year, businesses must be mindful of how data breaches occur in order to prevent the exposure of confidential information. Recognizing vulnerabilities in data security efforts can help minimize the effects a cyber attack may have on an organization.

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The Ponemon Institute has presented the results of it’s study the Cost of Phishing and Value of Employee Training sponsored by Wombat Security. The purpose of this research is to understand how training can reduce the financial consequences of phishing in the workplace.

The research reveals the majority of costs caused by successful phishing attacks are the result of the loss of employee productivity. Based on the analysis described later in this report, Ponemon extrapolate an average improvement of 64% from six proof of concept training projects. This improvement represents the change in employees who fell prey to phishing scams in the workplace before and after training.

As a result of effective training provided by Wombat, Ponemon estimate a cost savings of $1.8 million or $188.4 per employee/user. If companies paid Wombat’s standard fee of $3.69 per user for a program for up to 10,000 users, Ponemon determine a very substantial net benefit of $184.7 per user, for a remarkable one-year rate of return at 50X.

To determine the cost structure of phishing, Ponemon surveyed 377 IT and IT security practitioners in organizations in the United States. 39% of respondents are from organizations with 1,000 or more employees who have access to corporate email systems.

The topics covered in this research include the following:

The financial consequences of phishing scams

The financial impact of phishing on employee productivity

The cost to contain malware

The cost of malware not contained & the likelihood it will cause a material data breach

The cost of business disruption due to phishing

The cost to contain credential compromises

Potential cost savings from employee training

Phishing scams are costly. Often overlooked is the potential cost to organizations when employees are victimized by phishing scams. Ponemon’s cost analysis includes the cost to contain malware, the cost not contained, loss of productivity, the cost to contain credential compromises and the cost of credential compromises not contained. Based on these costs, the extrapolated total annual cost of phishing for the average-sized organization in Ponemon’s sample totals $3.77 million.

Summarized calculus on the cost of phishing. Estimated cost.

Part 1.

The cost to contain malware

$208,174

Part 2.

The cost of malware not contained

$338,098

Part 3.

Productivity losses from phishing

$1,819,923

Part 4.

The cost to contain credential compromises

$381,920

Part 5.

The cost of credential compromises not contained

$1,020,705

Total extrapolated cost

$3,768,820

The average total cost to contain malware annually is $1.9 million. The first step in understanding the overall cost is to analyze the six tasks to contain malware infections. Drawing from the empirical findings of an earlier study, Ponemon were able to derive cost estimates relating to six discrete tasks conducted by companies to contain malware infections in networks, enterprise systems and endpoints. The table below summarizes the annual hours incurred for six tasks by the average-sized organization on an annual basis. The largest tasks incurred to contain malware involve the cleaning and fixing of infected systems and conducting forensic investigations.

Documentation and planning represents the smallest tasks in terms of hours spent each year.

Six tasks to contain malware infections. Estimated hours per annum.

Planning

910

Capturing intelligence

3,806

Evaluating intelligence

2,844

Investigating

10,338

Cleaning & fixing

11,955

Documenting

671

Total hours

30,524

The annual cost to contain malware is based on the hours to resolve the incident. These cost estimates are based on a fully loaded average hourly labor rate for US-based IT security practitioners of $62. As can be seen, the extrapolated total cost to contain malware is $1.89 million.

The adjusted cost of malware containment resulting from phishing scams is $208,174 per annum. The final step in determining the cost of malware containment attributable to phishing is to calculate the percentage of malware incidents unleashed by successful phishing scams.

Response to the survey question, “What percent of all malware infections is caused by successful phishing scams?” The percentage rate of malware infections caused by phishing scams was based on Ponemon’s independent survey of IT security practitioners. As can be seen, the estimated range is less than 1% to more than 50%. The extrapolated average rate is 11%.

Drawing from the above analysis, Ponemon estimate the cost of malware containment as 11% of the previously calculated total cost of $1.9 million.

Cost of malware not contained

In this section, Ponemon estimate the cost of malware not contained at the device level to be $105.9 million. In other words, this cost occurs because malware evaded traditional defenses such as firewalls, anti-malware software and intrusion prevention systems. In this state Ponemon assume the malware becomes weaponized for attack.

Following are two attacks caused by weaponized malware:

Data exfiltration (a.k.a. material data breach)

Business disruptions

Ponemon determine a most likely cost using an expected cost framework, which is defined as:

Respondents in Ponemon’s survey were asked to estimate the probable maximum loss (PML) resulting from a material data breach (i.e., exfiltration) caused by weaponized malware. Ponemon’s research shows the distribution of maximum losses ranging from less than $10 million to more than $500 million.

The extrapolated average PML resulting from data exfiltration is $105.9 million.

What is the likelihood of weaponized malware causing a material data breach? In the context of this research, a material data breach involves the loss or theft of more than 1,000 records. Respondents were asked to estimate the likelihood of this occurring. According to the research the probability distribution ranges from less than .1% to more than 5%. The extrapolated average likelihood of occurrence is 1.9 percent over a 12-month period.

The cost of business disruption due to phishing is $66.9 million. Respondents were asked to estimate the PML resulting from business disruptions caused by weaponized malware. Business disruptions include denial of services, damage to IT infrastructure and revenue losses. The research shows the distribution of maximum losses ranging from less than $10 million to $500 million. The extrapolated average PML resulting from data exfiltration is $66.9 million.

How likely are business disruptions due to weaponized malware? Respondents were asked to estimate the likelihood of material business disruptions caused by weaponized malware. The research shows the probability distribution ranging from less than .1% to more than 5%. The extrapolated average likelihood of occurrence is 1.6% over a 12-month period.

The table below shows the expected cost of malware attacks relating to data exfiltration ($2 million) and disruptions to IT and business processes ($1.1 million). The total amount of $3.1 million is adjusted for the 11% of malware attacks originating from phishing scams, which yields an estimated cost of $338,098 per annum.

Recap for the cost of malware not contained

Calculus

Probable maximum loss resulting from data exfiltration

$105,900,000

Likelihood of occurrence over the next 12 months

1.90%

Expected value

$2,012,100

Probable maximum loss resulting from business disruptions (including denial of services, damage to IT infrastructure and revenue losses)

$66,345,000

Likelihood of occurrence over the next 12 months

1.60%

Expected value

$1,061,520

Total cost of malware not contained

$3,073,620

Percentage rate of malware infections caused by phishing scams

11%

Adjusted total cost attributable to phishing scams

$338,098

Employees waste an average of 4.16 hours annually due to phishing scams. As previously discussed, the majority of costs (52%) are due to the decline in employee productivity as a result of being phished. In this section, Ponemon estimate the productivity losses associated with phishing scams experienced by employees during the workday. Drawing upon Ponemon’s survey research, Ponemon extrapolated the total hours spent each year by employees/users viewing and possibly responding to phishing emails.

The research shows the distribution of time wasted for the average employee (office worker) due to phishing scams. The range of response is less than 1 hour to more than 25 hours per employee each year.

What is the cost to respond to a credential compromise? In this section, Ponemon estimate the costs incurred by organizations to contain credential compromises that originated from a successful phishing attack, including the theft of cryptographic keys and certificates. Ponemon’s first step in this analysis is to estimate the total number of compromises expected to occur over the next 12 months. The range of responses includes zero to more than 10 incidents.

How likely will a material data breach occur if the credential compromise is not contained? Respondents were asked to estimate the likelihood of a material data breach caused by credential compromise. Ponemon’s research shows the probability distribution ranging from less than .1% to 5%. The extrapolated average likelihood of occurrence is 4% over a 12-month period.

In this section, Ponemon estimates the potential cost savings that result from employee education that provides actionable advice and raises awareness about phishing and other related topics. As a starting point to this analysis, Ponemon obtained six proof of concept studies completed for six large companies.

These reports provided detailed findings that show the phishing email click rate for employees both before and after training. Ponemon provides the actual improvements experienced by companies, ranging from 26 to 99%, respectively. The average improvement for all six companies is 64%.

As a result of Wombat’s training on phishing that includes mock attacks and follow-up with indepth training, Ponemon estimate a high knowledge retention rate. Based on well-known research, training that focuses on actual practices should result in an average retention rate of approximately 75%. Applying this retention rate against the average improvement shown in the six proof of concept studies, Ponemon estimate a net long-term improvement in fighting phishing scams of 47.75%.

Proof of concept results Improvement

%

Company A

99%

Company B

72%

Company C

54%

Company D

26%

Company E

62%

Company F

69%

Average improvement

64%

Expected diminished learning retention over time (1-75%)

25%

Average net improvement

47.75%

The figures below provides a simple analysis of potential cost savings accruing to organizations that use an effective training approach to mitigating phishing scams. As shown before, Ponemon estimate a total cost of phishing for an average-sized organization at $3.77 million.

Assuming a net improvement of 47.75%, Ponemon estimate a cost savings of $1.80 million or $188.40 per employee/user. At a fee of $3.69 per employee/user, Ponemon determine a very substantial net benefit of $184.71 per user, or a one-year rate of return of 50X.